UK inflation remains at the lowest rate in almost three years.
Here, we explain everything you need to know about the latest inflation stats and which savings accounts offer inflation-beating rates.
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What is the current rate of inflation in the UK?
The current CPI rate of inflation in the UK is 2% for June 2024, according to the latest figures from the Office for National Statistics (ONS). That’s the same as the month before.
The current rate of core inflation (which removes more volatile products like food and fuel) in the UK is 3.5%, with no change also. Meanwhile, RPI (still used in some cases) in the UK is down slightly at 2.9%, (it was 3% last month).
Historic inflation rates
The graph below shows how CPI inflation has changed in the UK.
source: tradingeconomics.com
What is inflation?
The main thing to remember is even if the rate of inflation is falling, prices are still going up. They’re just increasing by a slower rate.
Check out our What are inflation and deflation? article to learn more about what price changes count towards inflation, as well as explanations of the different measures including CPI and RPI.
When is the next inflation announcement?
The next inflation announcement will be on 14 August 2024.
The ONS publishes inflation figures each month and has confirmed the following dates for upcoming announcements :
- 18 September 2024
- 16 October 2024
- 20 November 2024
- 18 December 2024
What’s changed this month?
Most price increases slowed down or remained level this time, while there was a larger drop for clothing. However hotels in particular (8.8%) got more expensive to level things out.
You can see how prices have changed for individual items in this ONS calculator, while this chart shows the annual CPI rates over 12 months for the last two months.
| CPI 12-month rate (%) | CPI 1-month rate (%) | ||
|---|---|---|---|
| May 2024 | Jun 2024 | ||
| CPI All items | 2.0 | 2.0 | |
| Food and non-alcoholic beverages | 1.7 | 1.5 | |
| Alcohol and tobacco | 7.8 | 7.3 | |
| Clothing and footwear | 3.0 | 1.6 | |
| Housing and household services | -4.8 | -4.7 | |
| Furniture and household goods | -1.9 | -1.6 | |
| Health | 6.2 | 6.3 | |
| Transport | 0.5 | 0.9 | |
| Communication | 4.1 | 2.9 | |
| Recreation and culture | 3.9 | 3.9 | |
| Education | 4.5 | 4.5 | |
| Restaurants and hotels | 5.8 | 6.2 | |
| Miscellaneous goods and services | 3.1 | 2.9 | |
| All goods | -1.3 | -1.4 | |
| All services | 5.7 | 5.7 | |
| CPI exc food, energy, alcohol and tobacco (core CPI) | 3.5 | 3.5 |
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Will inflation go up or down?
This is the second month where rate has reached the Bank of England target of 2%, though it was predicted to drop a little to 1.9%.
It’s possible it could still fall slightly in future months. However the Bank have recently said even if this happens they expect it to rise to 2.5% by the end of the year and be a while before it levels off at the target rate over the next few years.
What does it mean for the base rate of interest?
The Bank of England’s will meet next on 1 August, and it’s possible we’ll see a cut to the base rate then, though September is still the favourite month for a cut to happen.
We’ll share what happens at each meeting in our Base Rate update article.
Use our best buy tables to get the best rate on your savings.
Find out if you can get free cash for switching bank.
Do any savings accounts beat inflation?
Despite falling savings rates, we’re still at a place where there are lots of options that beat inflation!
The top-paying savings account is the Principality Regular Saver which offers 8%, though only for six months. It’s worth noting that this is a “regular savings account”.
This means that you’ll have to meet certain requirements to keep the account open and get the full amount of interest. For example, depositing up to a certain amount each month or limits on how much you can withdraw. (Some don’t permit withdrawals at all.)
You can also earn the same 7% with the Santander Edge Saver, if you hold a Santander Edge account. If you add direct debits (to earn cashback) on the linked current account there’s a monthly fee for the current account, so keep that in mind when comparing savings rates.
However if you’re looking for accounts without these balance restriction, there are now dozens of easy access and fixed rate savings accounts above the inflation rate.
The best easy access is at 5.2%. These allow more flexibility and you can deposit and withdraw your money more freely. And there are one year fixes going as high as 5.26%, though you’re locking your money away.
Hi Andy, great summary, very professional. I’m still learning about all of these subjects, so thanks for that!
Do you know what to expect regarding the interest rate of the savings accounts? Are the banks planning to reduce the interest rate soon based on the reduction in the UK inflation?
Government controlled ONS will produce low incorrect data for September in order to determine next years pension & benefit increases then “amend” the data by December so the government can claim that it is too late to correct next years increases.